1. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also include assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

2. As required by the Manufacturing and other Companies (Auditors Report) Order, 1988 issued by the Central Government of India in terms of sub-section (4 A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order.

3. Further to our comments in the Annexure referred to above, we report that:-

i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii) In our opinion, proper books of account as required by law have been kept by the company, so far as appears from our examination of those books;

iii) The Balance Sheet and Profit & Loss Account dealt with by this report are in agreement with the books of account;

iv) In our opinion, the Balance Sheet and Profit & Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

v) On the basis of the written representations received from the directors, as on 31st March, 2002 and taken on record by the Board of Directors, we report that none of the directors is disqualified as on as on 31st March, 2002 from being appointed as a director in terms of clause (g) of the sub-section (1) of the section 274 of the Companies Act, 1956;

vi) Except that-

(i) The Balances in Parties Accounts are subject to confirmation, reconciliation and realisation of cheques;

(ii) Details of amount outstanding to S.S.I. Units not available;

(iii) No provision has been made for interest on income tax liability that may arise.

In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so require and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) in the case of the Balance Sheet of the state of affairs of the company as at 31st March, 2002; and

b) in the case of Profit & Loss Account of the LOSS for the year ended on that date.

ANNEXURE REFERRED TO IN PARAGRAPH 2 OF OUR AUDITORS REPORT OF EVEN DATE ON THE ACCOUNTS FOR THE YEAR ENDED 31ST MARCH, 2002 OF DARSHAN OILS LIMITED, UDAI SINGH JAIN ROAD, ALIGARH

On the basis of such checks as we considered appropriate and in terms of the information and explanations given to us, we state that:-

1. The company has generally maintained proper records showing particulars, including quantitative details and situtation of its Fixed Assets. As explained to us, fixed assets, according to the practice of the Company, are physically verified by the management at reasonable intervals, in a phased verification programme, which, in our opinion is reasonable, looking to the size of the company and the nature of its business. According to the information and explanations given to us, no discrepancies have been noticed on physical verification.

2. None of the fixed assets has been revalued during the year.

3. As explained to us, the stocks of finished goods, merchant ing goods, stores, spare parts and raw materials have been physically verified during the year by the management.

4. The procedures explained to us, which are followed by the management for physical verification of the above referred stock, are in our opinion, reasonable and adequate in relation to the size of the company and nature of business.

5. According to the records produced to us for our verification, no material discrepancies were noticed on physical verification of stock reffered to in 3 above, as compared to book records, wherever maintained.

6. We have examined the stock verification records of the company. On the basis of such an examination and the assistance received from the companys commercial staff, we are satisfied that the valuation of stock, is fair and proper in accordance with the normally accepted accounting principles, and is on the same basis as in the preceding financial year.

7. According to the information and explanations given to us, the terms and condition of interest free unsecured loans taken from the parties listed in the register maintained under section 301 of the Companies Act, 1956, are not prejudicial to the interest of the company. In terms of sub-section (6) of section 370 of the Companies Act, 1956, provision of section 370 are no longer applicable to a company since 31st October, 1998.

8. According to the information and explanations given to us, the company has not given any loans, secured or unsecured, to companies, firms or other parties listed in the register maintained under section 301 of the Companies Act, 1956, in which, directors are interested, as contemplated under sub-section (6) of section 299 of the said Act. In terms of sub-section (6) of section 370 of the Companies Act, 1956, provision of section 370 are no longer applicable to a company since 31st October, 1998.

9. In our opinion and according to information and explanations given to us the company has not granted loans and advances in the nature of loan during the year except advance made in normal course of business.

10. In our opinion and according to information and explanations given to us, there are generally adequate internal control procedures commensurate with the size of the company and the nature of its business with regard to purchases of stores, raw materials including components, plant and machinery, equipment and other assets, and also for sale of goods.

11. According to information and explanations given to us, the transactions of purchase of goods and materials and sale of goods, materials and services made in pursuance of contracts or arrangements entered in the register maintained under section 301 and aggregating during the year to Rs. 50,000 or more in respect of each party have been made at prices which are reasonable having regard to prevailing market prices for such goods, materials or the services or the prices at which transactions for similar goods, materials and services have been made with other parties.

12. As explained to us, the company has a regular procedure for the determination of unserviceable or damaged stores, raw materials and finished goods, and loss, if any, have been provided.

13. In our opinion and according to the information and explanations given to us, the company has complied with the provisions of section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 with regard to deposits accepted from the public, except maintenance of liquidity in the form of Government Securities.

14. In our opinion, the company has maintained reasonable records for the sale and disposal of realisable waste (spent earth) and by-product. As regards other wastage, unusual broken components, spare parts and other miscellaneous items, no quantitative records are maintained and these are accounted for at the time of disposal.

15. On the basis of the internal audit reports broadly reviewed by us, we are of the opinion that, the coverage of internal audit functions carried out by the persons appointed by the management, is commensurate with the size of the company and nature of its business;

16. We have informed that Central Government has prescribed the maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 for production of Vanaspati where in accordance to the information supplied and explanation given to us, the company maintained the prescribed cost records, in accordance with the Companies Act, 1956. However, we have not made detailed examination of the same.

17. According to the records of the company it is generally regular in depositing Employees Provident Fund dues with the appropriate authorities, except some minor delays. ESI scheme is not applicable upon the company.

18. On the basis of the records of the company, no undisputed amounts were payable and outstanding in respect of Income Tax, Wealth Tax, Sales Tax, Customs Duty and Excise Duty, as at the last day of financial year, for a period of more than six months from the date they became payable. However, Income Tax of Rs. 8,68,267/- for Asstt. Year 2001-02 is yet to be deposited alongwith interest.

19. On the basis of (i) the examination of the books of account of the company, (ii) the vouchers examined by us on a test check basis, (iii) the explanations given to us against our inquiries, (iv) the checks and controls relating to authorising payments looking to the Companys needs and exigencies, and to the best of our knowledge and belief, we have not come across any expenses charged to revenue account, except for those which were either incurred under service-contract obligations with the employees or Director which, as explained to us, were incurred in accordance with normally accepted business practices, which, in our opinion and judgement and to the best of our knowledge and belief could be regarded as personal expenses;

20. The company is not a sick industrial company within the meaning of Clause (o) of Sub-Section (1) of Section 3 of the Sick Industrial Companies (Special Provisions) Act, 1985.

21. In respect of the trading activity of the company, on the basis of the information and explanations given to us, the company has a system for determination of damaged goods. Necessary provisions has been made in the accounts for possible losses which may arise on account of such items, on the basis of the past experience of the company and technical estimates made by the company.

                                                   For MITAL AND KUMAR,
                                                  Chartered Accountants
Place: ALIGARH
Date: 20.08.2002                               (RAJEEV KUMAR, F. C. A.)
                                                                Partner